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Full disclosure not in superannuation members' best interests: FSC
Forcing superannuation funds to disclose the "minute details" of each member's position would increase costs and confuse members, according to Financial Services Council (FSC) chief executive John Brogden.
The discussion about asset disclosure was set in motion by Australian Securities and Investments Commission (ASIC) chairman Greg Medcraft, who was informed by his fund (AustralianSuper) that he could not access information about the companies in which his superannuation was invested.
The FSC and the Association of Superannuation Funds of Australia are currently in discussions with ASIC about a framework for a disclosure regime. Medcraft wants the industry to come up with a proposal by June.
"We've been very open and keen to facilitate this initiative," said Brogden - but he added that not all levels of disclosure were in the best interests of the member.
"For the 50 per cent of Australians who are disengaged, if you were to send them a quarterly or six-monthly statement that looked a telephone bill it would actually further disengage them from their superannuation because it would be too detailed and, frankly, confusing," he said.
Instead of "minute detail", members should be informed about which sectors they are invested in. For example, rather than simply knowing that 30 per cent of their portfolio is invested in Australian equities, members should know which sectors are held within that exposure (eg, 9 per cent resources, 5 per cent financial services, etc), Brogden said.
Overly detailed disclosure could also have the effect of revealing a fund's investment strategy, which could end up hurting members, he said.
"If you publicly display the investment strategy, you're undermining an individual company's intellectual property, and you could actually damage their position in the market - and therefore you would damage the position of the investors," Brogden said.
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